There were 116 million homes in the US during the 2000 census. Now there are a couple hundred thousand fewer homes in the world and a couple hundred thousand more houses that people have been chased out of. That should fuel the housing price outside of New Orleans in several ways. First, more people will be purchasing homes outside of New Orleans. Second, more people will be renting homes outside of New Orleans driving up the price of substitutes. Third, building materials will be in high demand for a while driving up the cost of building new. Weighing against the bubble is the depression a lot of people face about the future.

High energy prices is kind of mixed for housing prices--it raises prices on close-in houses, lowers it on suburb houses, decreases business confidence, but may increase nominal house prices due to inflation.

In New Orleans, we are likely to see some fire sale prices. It is a good time to start a vulture fund to snap up those houses. New Orleans is likely to have a renaissance the same way that San Francisco, Boston and Chicago did after their big disasters.

That does indeed seem to be the case. In the last week, the number of homes available in my area (Baldwin county Alabama) with prices less than $150k have been cut by 80%. The affordable homes are being snatched up and the remaining homes are being pushed up in price.

Tob

New Orleans is likely to have a renaissance the same way that San Francisco, Boston and Chicago did after their big disasters.

I don't know what it would cost to bring in enough fill to raise all that land to at least sea level (and preferably a foot or 2 above), but it would have to be cheaper than what we're facing now. And it's doubtful anyone would drown in the process.

New Orleans has been losing population for years. It was a city built on an economic base (as a port) that doesn't make much sense anymore. Ports these days are highly automated, requiring few workers, too few to support a city. This is unlike Chicago or San Francisco, the economic cases for which were too compelling to abandon (I don't know about Boston).

See this story in the WaPost (free registration required) for more on this.

A friend's parents in Baton Rouge sold their house last week, taking advantage of the skyrocketing demand there despite having had no prior intention of moving. Since they're moving to much-higher-priced Denver now, I can only infer that they made quite a windfall, even selling well before the demand has peaked.

Apparently, private companies are buying up everything on the market, even cold-calling current residents to try to tempt them into selling. Some are evidently speculators, but others are large employers in the area, looking to at least temporarily relocate their employees so as to get their businesses running again.

FEMA is said to be buying up new apartment complexes still under construction. Cynically, I assume this is so that they can tear them down and build single-family homes for the displaced, or something equally sensible.

If recent history is any indicator, I doubt you will find any 'fire sale' property bargains in Katrina's swath, below sea level or not. Florida took four hurricane hits last year, and real estate prices began rising before the last gust of wind died down. We are rapidly reaching a point where blue collar and lower income families can no longer afford to live here. I don't know who the wealthy elite expect to mow their lawns, fix their yachts and automobiles, or even build, wire and plumb their mansions and high-brow condos when the working class has been driven from the state.... perhaps they are hoping enough of us will be thrown in prison for not being able to pay our taxes, and they'll be able to tap our services during weekend work-release programs.

For some reason I cannot fathom- suddenly EVERYBODY wants to live where there are hurricanes- as if the heat, humidity, mosquitos and sand spurs were not bad enough. Well, actually I can fathom the reason: people are STUPID.
So I expect land values in New Orleans and the surrounding area will skyrocket in the coming months.... and if NHC's predections are correct, property in the Carolinas is about to get real desirable as well.

New Orleans is the Edsel of cities. It's gradually sinking, and some evidence points to the city's own flood control as the cause. The Commissar has details here and here.

I'd rather invest in Gulfport-Biloxi (inland, not on the coast.)

SpaceCat,

I don't believe real estate prices in disaster prone areas climb because this land becomes more desired, but rather because the influx of insurance and government disaster funds inflates the value of the real estate.

My take is that the Katrina disaster ultimately isn't going to inflate housing prices that much because the affected areas are well outside the most expensive real estate markets. Competition for building supplies just isn't the main driver for real estate prices.

If on the other hand, a disaster of similar proportions was to hit New York City, Los Angelos, Washington, DC, etc. That would have a profound effect on real estate prices and probably would aggrevate the real estate bubbles in these areas.